‘Service export’ transaction not vitiated where foreign currency remittance credited in INR: CESTAT

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CESTAT allows ‘export’ benefit where Foreign Inward Remittance Certificate (FIRC) mentions receipt of remittances in assessee’s bank in INR; Relying on coordinate bench decision in Sun Area Real Estate Pvt. Ltd., CESTAT rejects Revenue contention that  Lloyd Bank, UK Branch is not recognized as an ‘authorized dealer’ and that Standard Chartered Bank only credited INR as received from UK in assessee’s account, hence condition of ‘export’ not met; Holds that in terms of foreign exchange manual of RBI, settlement of cross country payments through nostro mechanism qualifies as receipt of consideration in convertible foreign exchange, hence, ‘export’ benefit cannot be denied when fact of export of services to foreign entity remains undisputed;

States that, debit of foreign exchange by UK bank and consequent credit in INR in Indian bank as part of nostro transaction is reported to RBI and forms part of foreign exchange earning in India;  Also rejects Revenue’s classification of said transaction as ‘Programme Producer Service’ u/s 65 (105)(zzu) r/w Section 65(86b) of Finance Act by observing that there is no second person at the time of assessee producing the programme which is apparently for self : Delhi CESTAT

Citation: [TS-15-CESTAT-2012-ST]